A Tale of Stolen Inheritance of Utah Real Estate

The following story is the best way to illustrate the importance of Utah real estate vesting.

Jim Duncan was a 70 year old widower with 3 grown children. His 2 daughters were married and lived out of state. His son Thomas, also married, lived next to him on the family farm, which had been in the family for 5 generations. His son now handled most of the work on the farm. The farm was on the edge of a mid-size city and was worth several million dollars. Neither Jim nor his son had any interest in selling the farm, to them it was a way of life.

Thomas Duncan would be the 6th generation to own and run the farm. He would pass it on to his children, as the family had done for over 100 years. Thomas was happy when his dad decided to remarry. His new step mom was a few years younger than his father, with two grown children, which he met at the wedding.

Just 2 years later his father, and his fathers wife, were killed in a car accident. His father died at the scene, the wife died 2 days later in the hospital, without regaining consciousness. The funeral was the second time he met her children. A week later they offered to sell him the farm – for 2 million dollars! Thomas thought it was a joke. After consulting with his attorney, he learned they owned everything. Thomas was unable to pay the price and the farm was sold to someone else.

How Did This Happen?

I have seen this type of scenario happen several times. Here is what happened. When Jim Duncan remarried he transferred the farm to himself and his new wife, as “joint tenants”. Joint Tenants is the vesting (type of ownership) which allows the property to go to the owner that lives the longest; in this case the new wife.

This is the most common way of transferring property, to a married couple, and is usually the correct way. Using “Joint Tenants’ when a spouse dies, the property goes to the surviving spouse without attorneys or courts involved. Upon the death of Jim Duncan, in the car accident, the property automatically transferred to his wife. On her death, the property transferred to her heirs, as she was now the sole owner. Her heirs were her 2 children, not Tom Duncan.

The Moral of Utah Real Estate Vesting

Make sure you know the correct way to have property transferred, or the correct real estate vesting. It really does matter!

Note: The names and some details have been changed to protect the privacy of the parties involved. In this case the property should have been tenants in common.

Joint Tenancy in Real Estate. Joint Tenancy allows the real estate to transfer to the surviving owner(s) on the death of one owner. It is most commonly used between spouses but is used in other situations and between more than two people.

Tenancy in Common in Real Estate. Tenancy in Common is the standard form of vesting, allowing real estate to pass to the owner’s heirs. When a owners dies their part of the land passes to their heirs instead of the remaining owners. In contrast, Joint Tenancy passes the property to the surviving owners.

The Family Trust and Real Estate. A Family Trust, also known as a Family Living Trust or a Revocable Family Trust, is a legal entity created by a Trust Agreement to hold ownership to your personal and real property. Your attorney will create the necessary documents to establish the trust. A Trust is created for estate planning purposes.

Question: What are some possible title problems covered by a standard Owner’s Title Policy?

Fraud and Forgery

Those involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase.

In a western state, an innocent buyer purchased an attractive home site through a realty company, accepting a notarized deed from the seller, as well as receiving an Owner’s Title Policy. Then another couple, the true owners of the property (who lived in another locale) suddenly appeared and initiated legal action to prove their interest in the real estate was valid.

Under the owner’s title insurance policy of the innocent buyer, the title company provided a money settlement to protect against financial loss.

As it turned out the forger spent time in advance at the local court house, searching the public records to locate property with out of town owners, who had been in possession for an extended period of time. The individual involved, then forged and recorded a deed to a fictitious person and assumed the identity of that person before listing the property for sale to an innocent purchaser, handling moot contracts through an answering service.

Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing, despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Title Insurance Policy protects financially through negotiation by the insurer with third parties, payment for defending agains an attack on the title as insured, and payment of valid claims.

Conflicting Wills

Conflicts over a will from a deceased former owner may suggest a study topic for law school, but the subject can take on a reality dimension and all too quickly your home ownership is at stake.

After purchasing a residence, the new owner was startled when a brother of the seller claimed an ownership interest and sought a substantial amount of money as his share. It seemed that their late mother had given the house to the son, who placed the deed in his drawer without recording it at the court house.

Some 20 years later, after the death of the mother, the deed was discovered and then filed. Permission was granted in probate court to remove the property from the late mother’s estate, and the brother to who the residence initially was given sold the house. But the other brother appealed the probate court decision, claiming their mother really did not intend to give the house to his sibling.

Ultimately, the appeal was upheld and the new owner faced a significant financial loss. Since the new owner had acquired owner’s title insurance upon purchasing the real estate, the title company paid the claim, along with an additional amount in legal fees incurred during the defense.

Missing Heirs

When buying a home, it’s important to remember what you don’t know can cost you.

As an example illustrating the need for precautions, the American Land Title Association pointed to a couple who purchased a residence from a widow and her daughter, the only known heirs of the husband and father who died whitout leaving a will.

Soon after the sale, a man appeared – claiming he was the son of the late owner by a former marriage. As it turned out, he indeed was the son of the deceased man. This legal heir disapproved of his father’s remarriage and had vanished when the wedding took place. Nonetheless, the son was entitled to a share of the value of the home, which meant an expensive problem for the unwary couple purchasing the property.

Although the absence of a will hindered discovery of the missing heir in a title search, ALTA said that owner’s title insurance issued at the time of the real estate transaction would have financially protected the couple from the claim by the missing heir. For a one-time charge at closing, owner’s title insurance will safeguard against problems, including those even an exhaustive search may not reveal.

ALTA reminded that owner’s title insurance is necessary to fully protect a home buyer. Lender’s title insurance, which is usually required by the mortgage lender, serves as protection only for the lending institution.

Tag: heirs

Utah Real Estate Vesting: A Tale of Stolen Inheritance